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Wednesday, November 13, 2013

The Shamelessness of Bankers

The Shamelessness of Bankers

November 11, 2013

Richard Eskow

It’s
not easy to maintain a civil tone while describing the magnitude of the
misbehavior among executives at Wall Street’s largest institutions. To
criticize bankers is to describe large-scale wrongdoing, mass-produced
outrages that lead to widespread misery. It can’t be done without
routinely deploying words like “perjury,” “forgery,” “fraud,” “deceit,”
“corruption” and “rapaciousness.”

Unfortunately, the
forms of speech that adequately convey big-banker behavior also make it
easy for insiders in politics, government and the media to dismiss that
same speech as excessive.

William Dudley , chief executive officer of the Federal Reserve Bank of New York.

That’s one reason why some recent remarks
by William Dudley, president of the New York Federal Reserve Bank, are
so important. He’s no outsider and he’s no extremist. And yet, after
exploring potential solutions to the “too big to fail” problem in a
speech to Global Economic Policy Forum last week, Dudley went on to
discuss what he called “the apparent lack of respect for law, regulation
and the public trust.”

Added Dudley: “There is evidence of deep-seated cultural and ethical failures at many large financial institutions.”

Two phrases in
particular bear repeating: “the apparent lack of respect for law,
regulation and the public trust,” and “deep-seated cultural and ethical
failures.”

Mr. Dudley is using the
language of courtesy and civility, but his language is blunt and even
cutting. He’s speaking of individuals he knows well and with whom he
interacts daily. That doesn’t prevent him from saying that bank
executives have displayed disrespect for both law and regulation, that
they are not worthy of the public’s trust, and that they are culturally
and ethnically impaired at a profound level.

And yet, remarkably enough, House members from both parties are nevertheless supporting a Republican-backed initiative
which would unwind some of the already-inadequate provisions of the
Dodd-Frank financial reform law. There’s very little chance that
President Obama will sign their bills, since he considers Dodd-Frank a
signature achievement. But his administration retains its cozy
relationship with major banks – a relationship that includes
revolving-door appointees and a reluctant attitude toward the criminal
prosecution of bankers.

That’s no surprise. How
can legal safeguards be maintained when the money these institutions
spend taints the political process from beginning to end? How can bank
executives learn “respect for law, regulation and the public trust” when
they are subject to the flattery of journalists, rather than the scrutiny of journalists? (See Roger Lowenstein’s puff piece about bank CEO Jamie Dimon in the New York Times Magazine for a classic example of that genre.)

And how can the society
of big bank executives heal from its “deep-seated cultural and ethical
failures” when those executives are treated as founts of economic
wisdom, worthy of demanding sacrifices from others through political
lobbying groups like Fix the Debt, and still believe that their names
lend credibility to their efforts rather than casting shame on all of
them.

“When pride cometh,”
says the Bible in Proverbs, “then cometh shame.” Maybe that word should
form the collective noun for members of that profession. Like “a pride
of lions”: a “shame of bankers.”

But where is that shame, already? Big-bank executives have been insulated from it by sycophants in the media and politics.

In quoting Proverbs,
I’m not suggesting that a religious renewal could clean up Wall Street.
Too many crooks have done their stealing in the name of God. But something
has to restrain these runaway bankers. Social “shaming” might help. But
instead of ostracizing them for their contemptuous attitude toward
legality and fair play, too much of society lionizes them instead.

Our society worships
wealth and consumption, and that slavish devotion has reached massive
proportions. Along with that worship, our society seems to have rejected
the idea that there is any dignity in the life of ordinary, law-abiding
working people. In a survey conducted last year
by a whistleblowers’ defense law firm, nearly half of the senior
bankers polled acknowledged a willingness to break the law to make
money. (Presumably there were a number of others who also would, but
weren’t willing to admit it to a stranger.)

Proverbs goes on to say
that “riches profit not in the day of wrath: but righteousness
delivereth from death.” But who believes that anymore? Absent some
resurgence of prophetic outrage, our banker problem will continue.

However tragic the
consequences, it’s easy to understand the subservient behavior that
politicians and senior government officials display toward big-bank
executives. The politicians want campaign contributions. The senior
government officials want to follow the revolving-door route followed by
the likes of Robert Rubin, Larry Summers, and Peter Orszag, also have
become wealthy as employees, consultants or speech-givers to the largest
Wall Street institutions.

Jamie
Dimon, the CEO of JP Morgan Chase, seemed incapable of shame even after
the London Whale fiasco provided evidence that he was incapable of
curbing criminality in his chronically lawbreaking organization. (See “JPMorgan Chase: Incredibly Guilty.”)
It was not until multiple government investigations focused on his
institution that Dimon stopped trying to block government regulation of
his industry.

Nam ego illum periisse duco, cui quidem periit pudor,
wrote the ancient Roman playwright Plautus. It means, “I count him lost
who is lost to shame.” By that standard, Jamie Dimon and his ilk may
sadly be counted as lost among civilized human beings.

But the rest of us still need to be protected from them.
Some of that protection will come with better law enforcement, so that
they are discouraged from acting out their worst impulses. And part of
it will come through shaming them publicly, since most of them are human
beings with enormous egos.

“He that troubleth his
own house shall inherit the wind,” said the same passage in Proverbs. We
can’t depend on a higher power to make those words reality. We need to
use the tools we have been given – tools that include the law, our
social norms, and moral clarity – to protect ourselves from the
shamelessness of bankers.